Strategic Management

- Refers to analysis, formulation and the implementation of a specific Strategy - Art & science of formulating, implementing & evaluating decisions that enable an organization to achieve its objectives -To ensure success over all the operations Strategic Management used synonymously with Strategic Planning, whereas latter refers to formulation of strategy only

Strategy Defined
Strategy-Greek Strategia, directing military -a game plan to oust the competition -to attain competitive advantage -to scan the external & internal environment -to make a choice for markets to compete -how to stay clear of the threats -what is our business & what should it be -what are our products & the markets

Strategy Defined
As per Porter, a strategy is: - A plan or a course of action or a set of decision rules forming a pattern - Is related to those activities which move an organization from its current position to desired future state - Is concerned with the resources necessary for implementation of a plan

Strategic Management A Capstone Course-Evolution

1911-Integrative course in Business Management introduced in Harvard 1950-Research methodology introduced US -Gordon Howell report recommended a course on Business Policy -American Assembly of collegiate schools of Business made business policy mandatory -1990 title of Business Policy changed to SM Term SM used as-subtitle for Capstone Course

Strategic Management
i) Nature of Business Policy: Study of functions & responsibilities of senior management ii) Determining future course of action iii) To define what needs to be done to improve identity of the organization iv) Mobilization of resources

Strategic Management Importance of Business Policy

Business Policy acts as guide for executive development program for middle level managers who aim to occupy top positions 4 areas where Business Policy is beneficial: i) For understanding the Organization ii) For understanding business environment iii) For personal development iv) To integrate knowledge & experience

Strategic Management Purpose of Business Policy

- To exploit & create new & different opportunities for tomorrow - To integrate knowledge gained in various other functional areas - To adopt a clear approach towards problem solving - To understand complexities among Internal & External environment

Strategic Management Scope of Business Policy

-To integrate Intuition & Analysis -Adaptation to the changes in external & internal environment, by answering following questions;? -What kind of business should we become -Are we in the right field -Should we reshape our business -What new competitors are entering

Strategic Management Objectives of Business Policy

i) In terms of knowledge: - Gain experience to find unique solution - Gain information to determine Mission & Strategies ii) In terms of Skills: -To sharpen the skills of middle level -To develop analytical ability thro cases iii) In terms of Attitude: -To do away Dogmatism approach

Strategic Management
Levels at which a Strategy operates: 3 levels i.e. i) Corporate Level ii) Business (SBU) level iii) Functional Level

Strategic Management Concept of Strategies

a) Corporate Strategy- serves 3 initiatives -Establish position & diversification -Establish Investment Priorities -Capture cross business units b) Business Level Strategy: 2 factors -deciding products that are winning -Insulate business from rivals c) Functional Strategy: to support above 2

Strategic Decision Making

It is to make a specific choice from different strategic alternatives that help the Co. to achieve its objectives & realize its Mission It is the domain of Senior management Process of Strategic Decision Making: -It is continuous in nature -It must align itself with the environment -must have Cross functional Interaction

Strategic Decision Making

Issues in Strategic Decision Making: 6 i)Concept of Maximization & Satisficing ii) Rationality iii) Creativity by develop unique strategy iv) Variability v) Person Related Factors-age, education vi) Individual vs. Group Decisions

Strategic Decision MakingPhases

5 phases of Strategic Decision Making: 1) Establishing Hierarchy of Strategic Intent: Creating & communicating VISION Designing MISSION Defining the BUSINESS Setting OBJECTIVES

Strategic Decision MakingPhases

2) Formulation of Strategies: Performing Environmental Scanning Performing Organizational Appraisal Synergy, Core Competency, Capability factors & Techniques Formulating Strategies-Corporate, Business (Generic) & Functional Preparing a Strategic Plan & its review

Strategic Decision MakingPhases

3) Implementation of Strategies: Designing Structures & Systems Managing Behavioral Implementation Managing Functional Implementation Operationalizing the Strategies 4) Strategic Evaluation 5) Strategic Control

Strategists & their Roles

A strategist can be an individual or a group of individuals who are responsible for the success or failure of the organization

Strategists are usually occupants in higher hierarchies & generally possess a considerable authority for decision making

Types of Strategists & Roles

10 major types 1) Board of Directors: - Appointed & elected by the stake holders responsible for framing policies & ensuring Corporate Governance - Also responsible for Acquisitions, Mergers, Collaborations

Types of Strategists & Roles

2) Chief Executive Officer: -Carries different names such as MD, President or Executive Director, -Has many roles to perform including defining the Mission & objectives, interacting with external environment, Implementation of the strategies - To provide a direction to the organization

Types of Strategists & Roles

3) Role of Chief Operating Officer (COO): i) Legal or Symbolic Head ii) Leader iii) Monitor iv) Disseminator v) Spokesman vi) Resource Allocator vii) Negotiator & Liaison

Types of Strategists & Roles

4) Role of Entrepreneurs: He is normally the one who sets up the business, runs it successfully & consolidates it into a big entity, always being proactive & looking for a change continuously. 5) Role of Senior Management: dual role, mainly for implementation & evaluation but also front runners for formulation of a strategy. Can also attend to expansions, diversification or revamping technology

Types of Strategists & Roles

6)Role of SBU level Executives: An SBU being an organized & independent unit of a multi product, multidimensional firm is often headed by a Chief Executive who is responsible for profitability & operates with complete autonomy. Developing strategies for long term success. 7)Role of Middle Managers: Attached with heads of functional deptts. to implement strategies & to learn skills for a future strategists thro execution of policies.

Strategists & Roles

8) Role of Corporate Level Planning Staff: They are the support staff who provide valuable information, that has been collected through competitors strategies & environmental feed back, to the strategists for decision making, implementation, evaluation or even re-formulating the strategies.

Strategists & Roles

9) Role of Consultants: These are individual or group of individuals from outside the firm who provide unbiased strategic feed back on SWOT, Technical matters, Future trends & Project evaluations for strategic decision making. 10) Role of Executive Assistants: Secrecy & confidentiality of the information being top responsibility

Why firms dont do Strategic Planning

Poor Rewards Waste of Time Expensive Fear of Failure Prior bad experience Content with success Difference of opinion Over confidence

The Strategic Intent

It is a commitment to gain competitive advantage to become a leader by toppling existing ones & to sustain a highly respected status & desired leadership It thus clearly specifies What to do in future thro 3 elements: Vision Mission Objectives

Strategic Intent: VISION

Vision is a thought that needs to be translated into words & then to action to make dreams come true Vision talks about a position that an Organization wishes to attain in future Vision is a one sentence statement that defines the path to be followed by an organization in the future Vision is more of thoughts than day to day accomplishments

Strategic Intent: VISION

Characteristics of Vision:
-Ongoing activity for leadership

-a pathway, not above reality -not a Mission -sets op direction for a Co. to proceed

Elements of Strategic Vision:

-a clear one line statement to arouse

commitment -To convey Who we are, Where are we now, Where we will be in future -To answer What do we want to become -must contain future goals & plans

Strategic Intent: MISSION

It is a statement of purpose, beliefs & the reasons for existence of a firm Elements of a Mission: Mission statements to include 3 basic elements: Customer Needs- what is being satisfied Customer Groups- who are being served How to deliver values to consumers & satisfying their needs

Strategic Intent: Mission

How to develop Mission Statements: Common & widely accepted approach is to involve all Managers followed by appointing a Facilitator to prepare Mission Other common method is to use discussion groups of Managers Seeking unbiased advice from outside agencies or Consultants

Strategic Intent: Mission

Characteristics of Mission: -Helps setting up feasible alternatives -Statement should be broad -Statement not to be vague -must provide high degree of motivation -Should be enduring -Should be dynamic allowing additions & modifications

Strategic Intent: Mission

Components of Mission Statements: i) Customers (who are our customers) ii) Products (what are our main products) iii) Markets (where do we compete) iv) Technology (are we sound) v) Philosophy (Beliefs, values & Ethics) vi) Concern for public image vii) Concern for employees

Strategic Intent: Missionthe Business Definition

The business definition of a Mission must include all the 3 elements i.e. customer groups, customer needs & how to deliver value Business definition of a Mission, thus, to be provided at 2 levels i.e. -at Corporate Level: 3 elements of Mission will be wider in large Co.s than small ones -at SBU level: Mission to apply to each SBU

Strategic Intent: Objectives/ Goals

Objectives: close ended statements & not stereo type statements, often the end result of an activity or the end of planning, highlighting what is to be achieved by when & how much of what Goals: open ended statements often used interchangeably with objectives, laying no time frame for completion of a task or what is desired to achieve with no measurement of what is to be achieved

Strategic Intent- Objectives

Role of Objectives: -to help a Co. to pursue Mission & Vision -Helps in performance appraisals -Helps in Strategic Decision making Characteristics of Objectives: -Must be time bound -must be challenging -must be quantifiable -must be specific & clear to understand -must integrate functional areas of Marketing & production

Strategic Intent: Objectives

i) ii) iii) iv) v) vi) Areas in Objectives Setting or (What objectives to be set?): Efficiency (production targets, costs) Resource utilization Market Share (for leadership) Growth & Profitability Employees welfare Society welfare

Strategic Intent: Objectives-Setting

4 aspects while setting Objectives: i) Identify Needs for Objectives:- long term (market share) & short term (sales volumes) ii) Need for Top down objective setting- to guide lower management to support overall objectives iii) Types of Objectives-Strategic/Financial iv) Factors-Environment, Industry, Self

Strategic Intent: Critical Success Factors(CSF)

Also known Strategic Factors for success Rockart suggested 3 step process for CSF a) First generate success factors by asking what does it take to be successful b) Fine tuning these factors into Objectives c) Identify measures of performance Steiner: Brain Storming internally to develop CSFs & answer what to do for success Ohmae: suggested the need of careful allocation

Strategy Formulation Environment Assessment

It is the process of monitoring, evaluating & disseminating of information from the external & internal environment to the people who shape the destiny of an organization. It is thus the sum total of all the influences, events or conditions that affect & surround the organization.

Environment Assessment
Characteristics of Environment: Ever Changing & Dynamic, never static Highly complex Has varying effect (for some it offers an opportunity & for some it acts as a threat) - Is unpredictable & hence can create chaos - Multidimensional

Environment Assessment-SWOT
Environment consists of 2 types: External & Internal (factors outside Co.) (factors inside the Co.) External factors Constituents End -Economic Customers/Product opp-Social & Cultural Mkts/Competition -ortu -Technological Suppliers -nity & -Legal & Political Govt. Policies Threat -Competitive Creditors/Distributors

External Environment
Opportunity: It is a favorable condition that exists for a co. offering avenues for profitable growth, building up of competitive edge Imp. Opportunities are: - Easy Trade barriers, - Ability to acquire rival firms, - Expansion of distribution network, - Expansion of product lines - Expansion of customer base

External Environment
Threat: It is an unfavorable condition that can cause a damage or can pose a great risk to the well being of the organization. Imp. Threats - Rising Interest Rates - Fluctuating Foreign Exchange Rates - Threats of hostile take-over - New legal policies by change of Govt. - Introducing better products by competition

 It consists of : a) Strengths: These are those skills in which a company excels or exceeds Important Strengths: -Healthy financial conditions -Easy availability of capital for future use -Cost Advantage -Strong Brand Equity -Wide geographical coverage -Strong R & D -Strong Alliances & JVs

Internal Environment

Internal Environment
b) Weaknesses: These refer to something in which a company lacks or restricts it to move ahead Imp. Weaknesses: -Old & Obsolete technologies -Very high cost of production -Product line too thin & too narrow -High employee content -Poor Distribution -Under utilization of capacity

SWOT
Its Value: Kotler says managers who lack imagination fail to identify opportunities & can cause a disaster, thus value of SWOT lies in a careful evaluation that can lead to a clear formulation of a Strategy. How to formulate Strategy from SWOT: -Match Co.s Strengths with opportunities -Neutralize the effect of Threats -To rediscover your unknown strengths -Continue a constant SWOT re-evaluation

How to make SWOT effective

SWOT to TOWS
-Converting Threats to Opportunities & Overcoming the Weaknesses & convert them into Strengths - Exploit the Opportunities by carefully avoiding the Threats - Identifying which strength to be enhanced & which Weakness to be reduced e.g. Dell (Direct Mktg.), Wal Mart(EDLP)

Market Environment-Concept of PEST

It is to carry out a scan of various forces/ factors that will help in shaping up the future path of the organization, such as a) Customers- Need identification, Purchasing powers, Buying Behaviors b) Marketing Intermediaries: i) Middlemen comprising of Wholesalers/Retailers & ii) Facilitators made up of Transporters/ Warehousing c) Product Related factors; Price, Image d) Competitors: Threats & their SWOT

External Environment Appraisal

Also known as External Audit It reveals to the organization the key Opportunities to en-cash & potential Threats to avoid, calling for study of external factors i.e. Economic Factors Technological Factors Political-Legal- Governmental Factors Cultural & Social Factors International Business Environment (WTO) Supplier Environment

Economic Factors
The various Economic Factors include; Money Supply & Inflation rates GDP Ratios & Industry Growth rates Interest Rates Stock Markets Taxations & Monetary Policies LPG concept ( Liberalization, Privatization & Globalization) to pursue. Also study the concept of Industrial Organization I/O to know as to how to gain Competitive edge by integrating external & internal factors

Technological Factors
Factors affecting current & future business of an organization due to advancements in technology & machines such as: Altering the relative competitive cost

Making existing products as obsolete

Reducing/Eliminating Cost barriers Creating new competitive advantages that are stronger than the existing ones Creating new markets & new channels

Political-Legal-Governmental
It consist of Laws & Regulations that limit or influence organizations performance i.e -Form of Government -Stability of government -Strength of opposition -Advertising bans -Labor laws, ESI & PF -Weights & Measures act -Environment protection laws -Children employment

Cultural & Social

Why a mgt. practice is successful in one nation & a failure in

the other, factors as identified by Hofstede are 1) Power Distribution(PD)-unequal b/w societies 2) Uncertainty Avoidance(AV) extent to which a society feels threatened by uncertainties 3) Individualism-Collectivism(IC) extent to which a society values the freedom 4) Masculinity- Feminity (5) LongTerm Orientations Certain other Prominent Factors: a) Customs, Norms & Beliefs b) Ethnocentrism, Work Ethics c) Literacy Levels

International Business Environment

Factors affecting the co.s working due to: -Globalization & Liberalization -Financial Intermediaries: Banks, World Stock markets & Bullion markets -Trade barriers -Cross Cultural boundaries -Varying conditions of Economy -Racism, Layoffs & Recruitments -R & D advancements

Supplier Environment
Factors having a direct impact on business -Raw Materials Suppliers: Availability, cost, quality & continuity -Human Resource Suppliers: Cost of hiring, training & development -Finance Suppliers: Affordable, Interests -Capital Goods Supplier: Spare parts, cost & availability -Production Process Suppliers: Power, Gas, Oil & Furnaces etc.

WTO
Among the 3 most powerful institutions the other 2 being IBRD(International Bank for Reconstruction & Development or World Bank) & IMF Founded on 1st Jan, 1995 as a successor GATT (general agreement on Trade & Tariffs), specifies major guidelines such as: -Trade without discrimination & fair Competition -Access to National & International Markets by removing Trade & Tariff barriers -Prevention of unfair low pricing -To regulate Anti Dumping Duties Establish legal framework for IP protection

Environment Scanning
It is the process of identifying & monitoring the potential changes in the general environment that can make or mar the Co. 3 Factors for Scanning: a) Identification of Events b) Monitoring Emerging Trends c) Forecasting Events & Outcomes 3 Approaches to Environment Scanning:

a) Systematic- Regular collection & updating b) Adhoc: Conduct special study on need

Environment Scanning Techniques

Most widely used techniques range from: Statistical methods: such as Extrapolation making use of Historical Trends, Brain Storming & Delphi Techniques Other notable techniques are

-Scenario Writing -QUEST -ETOP

Environment Scanning Techniques

Scenario Writing:
It is most commonly used technique & is presented in the form of a report based on intuitions & judgments in the most descriptive or narrative style. It is compiled by the industry experts who are experienced enough to forecast events correctly.

Environment Scanning Techniques

Quick Environment Scanning (QUEST) Technique: 4 step process, by B. Nanus
-Observing major trends & events in the related industry -Speculating future impact by Envi. scanning -3 to5 scenarios written by QUEST director about major issues & discussion themes -Review of scenarios by Strategists & ranking options in terms of feasibilities

Environment Scanning Techniques

Environment Threat & Opportunity Profile (ETOP): This was proposed by
Gulieck to prepare an Opportunity & Threat profile for the organization by-Splitting the environment into different segments or sectors -Making an analysis of each segment in terms of its impact on the organization to help it to understand where it stands

Internal Environment Scanning/ Organizational Appraisal Unit II

Internal scanning often referred to Organizational Analysis is concerned with developing Organizational Resources internally which can not be easily matched or imitated by the competition. A Resource becomes a Strength if it provides the company with a competitive advantage & it becomes a Weakness if it does not provide the company with all that which its competitor has in abundance. Thus internal scanning or appraisal is all about the Strengths & Weakness of a Co.

Internal Environment Assessment

Evaluation of Key Resources: Barney in his VRIO framework proposed 4 criteria: 1) Value: does resource provide competitive advantage? 2) Rareness: Do other competitors possess it? 3) Imitate ability: Is it costly for others to copy 4) Organization: Is the co. organized to exploit the resource

 Categories of Internal resources: 3 types 1) Physical Resources: Plant & Machinery, Raw materials, Technology, 2) Human Resources: Employees, Skills & abilities, Training & Development, Experience, Intelligence & Knowledge 3) Organizational Resource: Copy right, Trade mark, Patents, Formal/Informal Structures More is the resource valuable, stronger is the Competitive Advantage

Internal Environment Assessment

Internal Appraisal Strategic Advantage

Gaining a Competitive Advantage is also known as Creating Strategic Advantage Strategic Advantage is result of capabilities of a Co. that offers reward in terms of increased sales/profits/market share & Co. image, while Strategic Disadvantage acts as a penalty in terms of decreased market shares & profits. To create a Strategic Advantage 2 aspects: a)Synergy leading to build up of Competency b) Organizational Capability Factors

Strategic Advantage
a) Synergy: It is an idea that whole is lesser or greater than sum total of its parts i.e. 2+2=3 or 5, 1+1=11 Synergy is developed & exists only when every one in organization pulls together as a team to achieve both short term & long term objectives of the organization, thus, leading to a build up of Competencies

Competency
Most valuable resource, is something a Co. is good at doing & to withstand any opposition in the mkt. by gaining competitive advantage

Competency is, therefore, a product of

experience & built-up efficiencies by learning over a period of time. Thus Competencies need to be developed- as it does not happen on its own, which are of 3 types i) Core competency ii) Distinctive competency iii) Competitive Capability

Strategic Advantage Competency

i) Core Competency: Something a Co. does well internally by quick response to changes, adopting innovations & able distribution of responsibilities. It resides in its people & in its intellectual capital & not in assets of balance sheets It is a product of experience accumulated by learning over time & is genuine strength A word of caution Core competency not to get converted into Core Rigidity as long spells of success often spoils & expose weaknesses Success begets failure because the more you know a thing works, the less likely is that it wont work

Strategic Advantage Competency

ii) Distinctive Competency: something a Company does well in comparison to its competitors & always depends upon organizational capabilities e.g. Sonys Trinitron Technology 4 ways to gain Distinctive Competency 1) Creating own Asset Endowment(Key Patent) 2) Acquired from others 3) Shared with alliance partner 4) Built & accumulated over a period of time

Strategic Advantage Competency

iii) Competitive Capability: It is something by the virtue of which a Co. gets differentiated from its competitors . It gets achieved when the customers of the Co. realize and feel the value as well as benefits by getting associated with the company It leads to building up of a highly sustainable advantage over the competitors.

Strategic Advantage Profile

b) Organizational Capability Factors: These comprise of 6 types: 1) Financial Capability Factors: it include
Sources of Funds- Borrowings, Reserves & surpluses, capital requirements Usage of Funds- Loans, Advances, Capital investments, Dividends Management of Funds- Tax planning, Budgeting, Financial Accounting

Organizational Capability Factors

2) Marketing Capability Factors: Product Related: Positioning, Packaging, Variety & Mix, Quality Price Related: Pricing structure & changes Place Related: Distribution & Logistics Promotion Related: Advertising, Direct Marketing, Intermediaries Other Factors: Co.s Image, MIS

Organizational Capability Factors

3) Operations Capability Factors: Production Related: Installed vs. Utilized capacity, Vertical Integration, R&D, Cost of production Operations & Control Factors: Inventory management, Quality control & Maintenance, Feed Forward Control systems R&D related: People, facilities, level of technology, New additions, Budgets

Organizational Capability Factors

4) Personnel Capability Factors:
Related to Personnel System: Manpower planning, Selection, Training & Development, Appraisals, Compensations Related to Co.s & Employees' Character: Corporate image, Perceptions, Working conditions Related to Industrial Relations: Unions, Safety & Welfare

Organizational Capability Factors

5) Management Information System Factors
Relating to Acquisition/Retention: Sources, confidentiality, Timely Related to Processing & Synthesis: Software capabilities Related to Retrieval & Usage: Speedy availability Related to Transmission & Dissemination Related to Support Systems: Infrastructure of IT, Up-gradation & compatibility

Organizational Capability Factors

6) General Management Factors:
Related to Managerial Systems: Corporate planning system, Rewards & Incentives, Strategic management Related to General Managers: Risk Taking abilities, Competency, Retirements & Track Records Related to Organizational Climate: Culture, Use of Power, Hierarchy

 3 commonly used methods: 1) Internal Analysis- comprises of: (a) Value Chain Analysis, (b) Quantitative Analysis- i) Financial & ii) Non financial (c) Qualitative Analysis 2) Comparative Analysis: comprises of (a) Historical Analysis, (b) Industry Norms (c) Bench Marking 3) Comprehensive Analysis: comprises of (a) Balance Score Card (b) Key factor Rating

Organization/Internal Appraisal Methods & Techniques

Value Chain Analysis

To determine cost positions by comparing cost of developing & mktg. a product vs. revenue generated. Consist of Primary & Support Activities. Primary Activities of 5 types 1) Inbound Logistics: Raw materials, Ware housing, Inventory controls 2) Operations- Fabrication, Assembling 3) Outbound Logistics: Transportation, Channel of Distribution, Warehousing 4) Marketing & Sales: Price, Advtg, Channel 5) Service: Repairs, Installations, Parts

Value Chain Analysis

Support Activities: consisting of 4 types:
1) Firms Infra structure: Financial health, Corporate Planning, Organizational Structures 2) Human Resource: Recruitments, Training & Development, Rewards, Terminations 3) Technology Developments: R&D, Process Management 4) Procurement: Machines, Resources, Raw materials

Value Chain Analysis

When a major competitor or a new entrant offers products at a very low prices, it could be mainly due to a cost advantage gained thro value chain A core competency is also a value chain activity to gain & sustain competitive edge An automobile Co.s value chain activities include: Auto leasing, Insurance, Used Cars sales & purchase, After sales Service

Quantitative Analysis
Study of financial & Non financial Factors:

Financial Factors: Study of imp. Ratios:

-Liquidity Ratio: ability to meet maturing short term obligations -Leverage Ratio: To know the extent to which a co. is financed by debt -Activity Ratio: To know effectiveness of a co. to use its resources -Profitability Ratio: To measure overall effectiveness on ROI

Financial Ratios
Current Ratio= Cash & Securities Current Liabilities Quick/Acid Test=Current AssetInventory Current Liabilities Debt/Equity Ratio= Total Debt Total Equity Fixed Asset Turnover= Total Sales Fixed Assets Operating Profit= Profit before Tax & Interest Total Sales

Quantitative Analysis
Non Financial Quantitative Analysis:
The various factors studied under this are: Market Shares Employees Turnovers Production Cycles Advertising Effectiveness Trade Marks & Patents MIS

Qualitative Analysis
The various aspects under this, which can not be measured in absolute figures or terms, are: - Employee Satisfaction - Motivation - Perception - Work culture - Work environment - Organizational climate

Comparative Analysis
3 methods to evaluate strength & weakness: 1) Historical Analysis: To measure how well or badly an organization has faired in past. Conducted mainly thro balance sheets & profit & loss statements. Its analysis also reveals areas of consistent good performance indicate area Strengths. The major drawback is-it does not indicate any comparison with competition & also does not state any reasons for poor show

Comparative Analysis
2) Industry Norms: An industry is defined
as an aggregate of homogeneous firms. The performance indices vary from industry to industry & thus each firm in order to evaluate its performance must compare with the norms & standards set up by the industry so as to identify areas of excellence or improvements.

Comparative Analysis
3) Bench Marking: Bench mark is reference
point to measure & evaluate performance: 1) To compare what? It includes: Performance- Owns with other co's Process- compare methods & processes Strategic-compare long term decisions 2) To compare against whom? It includes: Internal-comparison b/w units of same co. Competitive-Own performance with competition Functional- b/w non-competition in same sector

Comprehensive Analysis
2 most popular methods:

1) Balance Score Card: Kaplan & Norton of

Harvard, to include customer viewpoint as well in evaluating the performance & not only the financial indices, to answer: -How do customers rate us? -What needs to be done to excel? -Are we creating value? -How do we treat the shareholders?

2) Key Factor Rating- same as that of

Organizational Capability factors

 It is primarily about the choice of direction a co. needs to follow, including decisions regarding financial & other resources to form a business unit or a companys product line, to gain Competitive edge. Also known as Grand or Directional Strategy. 4 Grand Strategies-

Corporate Strategy Unit III

1) Stability Strategies 2) Growth Or Expansion Strategies 3) Retrenchment Strategy 4) Combination Strategy

Corporate Strategy
1) Stability Strategies: adopted by Cos who
have found their niche segments & are relatively happy content with achievement The strategy is best when a Co. operates in a reasonably predictable environment. The drawback of this strategy is- it is too gud in the short term but is fatal in long run. Types of Stability Strategies: a) No Change Strategy b) Profit Strategy c) Pause/Proceed-Caution Strategy

a) No Change Strategy: A strategy to do

nothing new & to continue with the present operations hoping that future will remain as an extension of the present, due to reasons such as: No new competitor will enter the industry No immediate threat of substitute product No opportunities for growth No obvious changes in strengths & weakness of the organization

Stability Strategies